WA coal stoush goes global

Administrators of
Ric Stowe
’s debt-laden coal empire have raced to India in a bid to rescue the sale of the former tycoon’s coal-fired power assets.

The Bluewaters power station – which supplies about 10 per cent of Western Australia’s power needs – was sold in April to Japanese power companies Sumitomo and Kansai Electric for about $1.2 billion.

However, as The Australian Financial Review revealed last month, the settlement of the sale was postponed until at least September.

This was because Indian energy giant Lanco Infratech – which bought Mr Stowe’s adjoining coalmine in December for $750 million – threatened to withhold coal supplies to Bluewaters unless it was paid double for its fuel.

Lanco claimed “operational difficulties" at the mine for its move, but the administrators viewed the action as opportunistic.

Administrator Brian McMaster would not comment on the progress of negotiations but confirmed yesterday that he and other Korda Mentha staff were in India to try and resolve the issue, having flown there on Monday night.

Lanco is said to want to scrap the contract it has to supply coal to Bluewaters at a base price of $33 a tonne, and force the new Japanese owners to pay $62 a tonne.

A source close to the transaction said administrators needed to provide some certainty to bankers involved in the transaction by last night, if it was not to fall over.

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However, the source said that a compromise price above $45 a tonne would mean financiers exposed to Mr Stowe’s debt-laden former empire – including ANZ Banking Group – would be forced to take a haircut on their loans, as the value of Bluewaters would fall.